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Europe, US Preparing To Impose Sanctions On Russia

Courtesy of ZeroHedge View original post here.

Now that Putin has officially recognized the separatists regions of Donetsk and Luhansk as independent, sovereign states, warning that from this moment onward, Ukraine must halt all military actions against Donbas, or whatever happens next will be on them and the West, it was only a matter of time before Europe (and the West) retaliated with progressively escalating sanctions.

Sure enough, the ink wasn't quite dry yet on Putin's signature, when the EU's high representative for foreign affairs and security policy, Josep Borrell Fontelles tweeted that "the recognition of the two separatist territories in Ukraine is a blatant violation of international law, the territorial integrity of Ukraine and the Minsk agreements" adding that "The EU and its partners will react with unity, firmness and with determination in solidarity with Ukraine."

Others chimed in, led by the Latvian foreign minister who said the EU must immediately impose sanctions on Russia after it recognized the separatist regions, while moments later the Polish prime minister said that Russia's decision is an act of aggression on Ukraine, and that sanctions should be imposed immediately.

In a kneejerk response, European Commission president von der Leyen confirmed that the union will react with sanctions against Russia's recognition of independence of the Ukraine regions, which is a blatant violation of international law as well as the Minsk agreements.

UK foreign minister Truss was also quick to note that Putin's action signals the end of the Minsk process and violates the UN charter, noting that Russia has decided to choose confrontation over dialogue.

NATO president Stoltenberg joined the chorus condemning Russia's decision to recognize the independence of the Ukraine rebel regions.

Meanwhile, according to a report from WSJ's Laurence Norman, "the actual EU sanctions situation re Russia is that consultations are going on at the top level of the EU institutions and there will be consultations with Washington and London on whether tonight should be trigger point for sanctions."

Biden has also been looped in, with Ukraine president Zelensky stating that he has already spoken to the US president in a phone call that is said to have lasted 35 minutes. Some more details from Reuters on what the US response will be:

  • WHITE HOUSE SAYS PRESIDENT BIDEN WILL SOON ISSUE AN EXECUTIVE ORDER THAT WILL PROHIBIT NEW INVESTMENT, TRADE, AND FINANCING BY U.S. PERSONS TO, FROM, OR IN THE SO-CALLED DNR AND LNR REGIONS OF UKRAINE
  • WHITE HOUSE SAYS WE WILL ALSO SOON ANNOUNCE ADDITIONAL MEASURES RELATED TO TODAY’S BLATANT VIOLATION OF RUSSIA’S INTERNATIONAL COMMITMENTS
  • WHITE HOUSE SAYS THESE MEASURES ARE SEPARATE FROM AND WOULD BE IN ADDITION TO THE SWIFT AND SEVERE ECONOMIC MEASURES WE HAVE BEEN PREPARING IN COORDINATION WITH ALLIES IF FURTHER INVASION
  • WHITE HOUSE SAYS WE ARE CONTINUING TO CLOSELY CONSULT WITH ALLIES AND PARTNERS, INCLUDING UKRAINE, ON NEXT STEPS AND ON RUSSIA’S ONGOING ESCALATION ALONG THE BORDER WITH UKRAINE

What is curious about the upcoming Biden EO is that he is punishing the separatist regions – which at least officially are part of Ukraine – effectively admitting with his punitive actions that they are now part of Russia. As for Biden, at least check he was speaking to Macron and Scholz:

What is most remakrable, is that the bickering within Europe on the proper response appears to have already begun, as the WSJ's Norman explains:

Let’s just back up a sec on where EU stands on #Russia sanctions. The question is not is there a serious sanctions package on the table if Russia invades Ukraine? Because the answer to that is clearly yes. The question is what’s the trigger? Invasion or recognition of Don/Luh?

As of now, despite confusion spread earlier by @JosepBorrellF, seems that EU will apply targeted sanctions over those involved in the “recognition” decision. We don’t yet know if that will include Putin. BUT NONE OF THAT MEANS rest of sanctions package won’t be used if invasion.

And to add to that, there is no consensus among member states yet on whether recognition is the correct big sanctions trigger. There is at least one country — Hungary — that argues (not necessarily inaccurately) that sanctions package was drawn up for invasion/incursion and we're not at that point yet.

And let's all remember that even one member state could veto this move.

So there's lots of assessing going on about next steps, including with non-EU partners. Not clear where that ends up yet.

Assuming Europe can eventually agree on a sanctions package, one key question is whether Putin will even be targeted:

And another big question is whether Europe – which is extremely reliant on Russian energy – will go so far as sanctioning Russian gas imports, ensuring a spike in energy prices in the coming days, and whether the West will seek to eject Russian from SWIFT, which will either bring Russia even closer to China or could become a bullish catalyst for cryptocurrencies.

And while we wait for the Western unified response, we wonder what, if anything, China will say in response to Putin's announcement and whether the Russian president acted without first pre-clearing his action with Beijing.


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